No. 12: September-December 2014

Silvia Serrano

South Caucasus Region

Academic Foresights

How do you analyze the present situation of the South Caucasus region?

The three States of the South Caucasus (Georgia, Armenia, and Azerbaijan) have been facing different challenges and have engaged in different political paths. Nevertheless, some common patterns can be observed; in addition, development in one part of the region systematically affects the whole region. In this sense, the South Caucasus should be considered as a “security system”

The current situation in the Caucasus region is dominated by so called frozen (that is, unresolved) conflicts, and ongoing violence. Security concerns overshadow all the other political issues. Outcomes of these ethno-territorial conflicts have shaped to a large extent present alliances and political choices

Both  Azerbaijan and Georgia lack control over substantial parts of their territories. In 1994, Baku lost Nagorno-Karabagh - a district inhabited mainly by Armenians - as well as the neighboring Lachin corridor, occupied since then by Armenian forces. Tbilisi lost the war over South Ossetia (1991-1992) and the Autonomous Republic of Abkhazia (1992-1993). The attempt to emancipate from Russia came with a price: in August 2008, as a result of a five day war, Moscow has recognized the independence of both separatist entities, challenging international borders for the first time after the collapse of the Soviet Union. Hence the Georgian Government relies on its Western partners to counterbalance the Russian threat and is willing to get closer to Euro-Atlantic structures. On the contrary, Armenia sees Russia as the sole guarantor of its security and of the status quo in the region, and is very sensitive to pressures from Moscow. A striking example is that of September 2013 , when Armenia renounced to sign the EU Association Agreement and a Deep and Comprehensive Free Trade Area (DCFTA) (two months before Ukraine) and declared that it would join Russia sponsored Eurasian Custom Union. On the one hand, Erevan is isolated from regional integration projects; on the other hand, its dependence upon Russia limits dramatically its sovereignty.

In the long run, however Azerbaijan is likely to be the winner of the competition in the region. Thanks to its naturel resources –it benefits from rich oil and natural gas reserves-, it has more room for manoeuver than its neighbors, and has been able to maintain a balanced policy towards Russia and the West. Thanks to a strategic partnership with Georgia and Turkey, Azerbaijan has become a major route for hydrocarbon transit from Central Asia to European markets. Oil revenues have fuelled the military capabilities of the State. In 2011, Azerbaijan’s spending on defense exceeded Armenia’s entire national budget; obviously, in the last decade, the balance of power has shifted to Baku’s advantage and the risk of hostilities resumption, against Armenia, has been growing.

Hard security issues are not the only concern of the Caucasian nations. As a consequence of factors such as disruption of trade relations with Russia - following the collapse of the Soviet Union -, large scale privatization programs, and Welfare State breakdown, the standards of life have plummeted and inequalities have dramatically increased. Uneven geopolitical opportunities and economic resources have led to different transition patterns and political choices. While Georgia, after its Rose Revolution in November 2003, engaged on neoliberal reforms and democratization course, in Armenia and Azerbaijan, corrupted elites reap the benefits of the economic resources and remain in power thanks to authoritarian measures and repressions, and thus appear as neo-patrimonial regimes. These differences notwithstanding, the population in all three countries has suffered unprecedented impoverishment.

In your opinion, how will the situation likely evolve over the next five years?

Given the instability in the Caucasus and in its immediate neighborhood (Middle East, Iran, Russia), any guess about how the situation should evolve, over the next 5 years, is risky. For example, if the conflicts defreeze, the situation may change dramatically. Nonetheless, some of the factors determining further development can be identified even now.

The first one is related to Iran. The pivotal geopolitical situation of the Caucasus, and more specifically, the importance of transit tubes, stems directly from the closure of the Iranian routes. Should the relations between Iran and the West get improved and the blockade lifted, the whole oil transit architecture will be questioned, as well as Azerbaijan’s role. The game of alliance and partnership will be likely reshaped. There are two more reasons to why Iranian developments are so crucial for the South Caucasus. The first one is Iran’s ethnic composition: several millions of Iranian citizens are Azeri, which may become instrumental in contesting the borders with Azerbaijan – considered by some as “North Azerbaijan” (as opposed to “South Azerbaijan”, an Iranian region around Tabriz). The second reason is Islam. About 60% of the Azerbaijani population is Shia. So far government in Baku has managed to keep control over mosques and to curtail Iranian influence over believers, but they may not always be this successful in the future.

Relations between Armenia and Turkey are also decisive for evolution in the region. Armenia’s borders with Azerbaijan and Turkey have been closed since the beginning of the 1990s, putting Armenia in a landlocked situation and impeding it to diversify its commercial partners. In the wake of August 2008 war, under the initiative of Erdogan Government, Armenian Turkish relations improved, and there were even talks about reopening the border. So far, this rapprochement has failed, mainly due to pressures from Baku on Ankara. With the anniversary of 1915 genocide, Turkish-Armenian relations will be on top of agenda, in 2015. Official declarations leave way to expecting that Turkish position is likely to change on this topic, with possible consequences on relations with Erevan.

Another variable is linked to Russia’s policy in the post-soviet space: middle term evolution in the South Caucasus will be impacted by the success or the failure of Russian regional integration initiatives. With the Ukrainian crisis, two opposite trends in the post-Soviet space evolution have become blatant. On the one hand, Moscow is willing to reassert its presence in what it perceives as its courtyard, and is seeking to achieve this goal both through the Eurasian Custom Union, officially launched in May 2014, and through the Eurasian Economic Union. On the other hand, Moscow is hampered by its economic weakness and dependence upon Western investments, a situation aggravated by the sanctions adopted against Moscow after incorporation of Crimea in March 2014.  Further deterioration of the domestic Russian economy would impact Caucasian economies, heavily relying on remittancies from Caucasian migrant workers in Russia. Besides, Putin has been remediating his loss of popularity by playing on patriotism and imperialist ambitions, thus unleashing extremist and nationalist forces eager to reestablish Russian control over the former Soviet Republics. As a result, even Armenia has been perceiving Russia as an unpredictable partner and a weak guarantor for its security.

What are the structural long-term perspectives?

Several historical and geographical factors may prove determining over long term development. Even if the United States and Europe have demonstrated their willingness to contribute to regional developments, their priorities may change, as they have done in the past. Washington’ low profile during August 2008 war has shown to the South Caucasus populations that they cannot rely on the West for their security. Moscow, on the contrary, is unlikely to disengage from a region perceived as directly related to Russian interests, security and power, with common borders and historical ties.

South Caucasian societies will also have to face long term consequences of collapse of the former Soviet social institutions, including educational system and public health. Ruin or privatization of schools and universities has led to unequal access to education and decline in the overall education level, further aggravated by brain drain (that visa free regime with the EU is only likely to accelerate). In addition, Armenia and Georgia face a severe demographic crisis which will affect development capacity. Once among the most prosperous Soviet Republics, the South Caucasus States, including Azerbaijan resource-driven economy, have lost many of their human assets and will have difficulties in confronting the growing international competition.

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Silvia Serrano is Associate Professor in Political Science at the Université d’Auvergne (Clermont-Ferrand, France). She is a specialist in post-soviet Studies and she has published several books and numerous articles on the Caucasus. She is currently conducting research on Religion and Politics in the Caucasus. Last publication: Development in Central Centra Asia and the Caucasus. Migration, Democratisation and Inequality in the Post-Soviet Era, London, I.B. Tauris, 2014, [ed. with Hohmann Sophie, Mouradian Claire, Thorez Julien].

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